Poor roads, rail and digital not-spots in the South West are the worst in the UK, according to a major report by leading economists at KPMG.

The inaugural UK regional productivity performance report shows that the South West is ranked the worst by the Department for Transport for regional transport connectivity and only one above Wales for digital connectivity.

Artist impression of Hinkley in Somerset

And it suggests that the region’s aerospace and nuclear sectors, like Newquay Aerohub and Hinkley Point C, could be major growth areas ripe for investment.

As the chancellor Philip Hammond gets ready to unveil his budget on Wednesday, a plea has gone out for the South West’s infrastructure which needs urgent investment if the region’s productivity is to improve.

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Ian Brokenshire, senior partner for KPMG Plymouth, said: “I hope next week’s Budget reflects the fact that investment is needed in the South West, if the region is to fulfil its potential.

"We are all too aware that our infrastructure is lagging way behind the rest of the country, and connectivity issues with our roads, railways and airports certainly has an impact on the region’s productivity. Of particular importance is the need to improve links to London by extending the electrification programme to include suburban rail services in Bristol, Gloucestershire and Somerset. Also a priority should be investment to improve rail and road links to our regional airports.

Great Western Railway has invested in new trains. The IEP class 802 passes through Dawlish (Image: Thomas Mills)

“In our more rural areas, particularly across Devon and Cornwall, urgent investment is needed to improve the digital infrastructure.”

The report reveals that the South West is one of the most economically diverse regions in the UK, with Swindon, Bristol and Bath winning the productivity race, while Cornwall lags behind.

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The report recommends that the national industrial strategy should recognise and support the further development of the aerospace, specialist engineering and nuclear sectors - built around the £20bn Hinkley development - which it says stands out as sectors ripe for focus and investment.

It reveals that the South West is a strong innovator in terms of patents count, and has an above national average in research and development expenditure.

Mr Brokenshire said that, promisingly, the report reaffirms the fact that the South West has a bustling SME community, who are making a real impact.

Small businesses play a significant role in the region, and contribute more to the local economy than the national average.

He said: “Our small businesses should be encouraged to reap the benefits from growth hubs to help them get to the next stage.”

The region, along with London and the South East, is also more export-orientated than the rest of the UK.

The figures also revealed that in the past four years, just 4% of all UK inward foreign direct investment (FDI) were located in the region. However, it does mark a strong growth rate (14%) in the number of FDI projects compared to the preceding four-year period.

The report also concludes that devolution of some powers and money to the West of England Combined Authority, covering Bath & North East Somerset, Bristol & South Gloucestershire, will improve the speed of decision-making and help focus on certain projects, it will not address the needs of the wider South West.

Looking at the national picture, the study points out that improving regional infrastructure, particularly transport links in the Northern Powerhouse regions and digital infrastructure in London could be one of the main drivers to unlocking UK productivity.

Yael Selfin, Chief Economist at KPMG UK, said: “Our research shows that a regional approach to improving productivity can be an effective way to tackle the productivity puzzle. We hope to see measures addressing the different barriers, as well as a more regionally targeted approach, to improving productivity levels in the Chancellor’s Budget next week.”